Wage garnishment is legal when an employer receives a court order or IRS levy. However, the employer must withhold an employee’s wages in response.
It is most commonly done for the child and spousal support debts but can also be used by the government for federally-backed student loans and taxes. The rules around this process differ from state to state.
What Is Garnishment?
Wage garnishment allows creditors to legally withhold money from an employee’s paycheck or bank account to settle their debt. It is usually done by court order and can be triggered by unpaid taxes, monetary fines, or defaulted student loans. The money that can be withheld from an employee’s salary is governed by federal and state legislation, and they also set limitations for when wage garnishment payroll begins and ends.
The first step for a creditor to garnish an employee’s wages is to get a judgment from a court. Once the judgment is obtained, they send that document to the employer via a sheriff or constable, known as a “Writ of Garnishment.”
This writ orders the employer to withhold a specific amount of an employee’s paycheck and send it directly to the creditor until their debt is paid in full. In some cases, the writ may also authorize the creditor to seize assets such as personal property, financial accounts, or even a person’s bank accounts if they have not been paid.
Once an employer receives a writ, they must inform their employees immediately in writing. It can be done with a standard form that is included with the writ or by sending an email to the affected employee. In addition, employers must prioritize notifying their HR or payroll department so that relevant information can be entered into the payroll system to ensure all required payments are made on time.
Garnishment Process
Creditors and debt collection agencies use garnishment as a last resort when they’ve tried all other options for collecting unpaid debt. If the court approves a garnishment, they send an order to the employer and the bank that withholds a portion of the employee’s disposable income. Depending on the type of garnishment, the order may be called a writ of garnishment, levy, or income withholding order. The court also requires the employer to notify the employee of the garnishment order, typically 30 days after the order’s issue.
The employee has the option to challenge the garnishment order. The employee must justify the difficulty, such as needing to be adequately notified of the garnishment or that it will cause financial hardship. The legal window for challenging a garnishment is short, so the employee should seek legal assistance immediately.
Depending on the state, some types of income are exempt from garnishment. It includes federal and state benefits, like Social Security and unemployment insurance, child support, and debts owed to the federal government. It’s essential for employers to understand the state regulations that apply and to avoid running afoul of them. It’s also necessary for employees to know the limits of wage garnishment, including that only a certain percentage of their disposable income can be withheld each pay period.
Garnishment Orders
Wage garnishment is when creditors legally require your employer to turn over a part of your paycheck to pay off debts. A court order is necessary to start the process. The order typically lists the county where your employee lives, the amount of your employee’s disposable earnings, and the amount you must withhold each pay period. Some states have additional restrictions. In addition to federal laws, the Consumer Credit Protection Act (Title III) limits how much can be garnished. It protects employees from being fired if their wages are garnished for one debt.
A court may also allow a garnishment to be started without a judgment, as in the case of student loans or child support. In that situation, the creditor files a writ of execution with the sheriff in the relevant county. The sheriff then notifies your employee’s employer that the writ of execution has been filed and instructs your employee to contact the marshal or sheriff’s office for further instructions, including how much to withhold each pay period.
If your employee wishes to contest the writ of execution, 15 business days following the date on the writ’s notification, they must submit a hearing request. The debt or the amount to be deducted from each paycheck might be the subject of the hearing. If the writ of execution is not contested, it will become a garnishment order and must be followed as prescribed by law.
Garnishment Payments
Creditors must receive a garnishment order from a court or government agency to garnish their wages. The order will detail how much of your earnings will be withheld, the amount due, and the reason behind the garnishment. Once the process begins, you may need more money to cover your monthly expenses, which can be stressful. You should seek legal help to determine whether you have a case to dispute the debt you are being garnished for.
If you and the debt collector cannot agree on a payment schedule, it is best to stay current on your payments and not overextend yourself. Wage garnishment often ends if you can pay off the debt in full or after a certain period. Therefore, it is essential to keep your employer informed on the progress of the garnishment so that they can adequately prepare your paycheck each time.
Wage garnishment is the only type of debt collection a creditor can pursue. Another levy involves taking money directly from your bank account or other financial assets. For example, it can collect a debt such as back taxes, child support, or student loans. Levy laws vary by state and federal, so knowing how your state handles such collections is essential.
